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Tuesday, April 28, 2009

In the government re-do of Chrysler, the United Auto Workers get a 55% stake. The Treasury is planning on keeping 10%. What’s left for Fiat is a 20% share, plus an opportunity to grow that to 35% if Chrysler meets “performance targets”. The banks – no doubt strong armed by the government as TARP “beneficiaries” – have apparently agreed to write down about $5 billion or so in debt for a minor, and soon to be worthless, equity position.

Plus, at the first signs of success, there’s the chance that Congress will want to re-write the rules as well. Furthermore, there’s a high probability that either Congress or the Administration will force Chrysler to build a bunch of expensive, impractical, and unsafe “green” cars that nobody wants to buy. Jeeps, SUVS, and mini-vans are, of course, evil, because people like them.